Which of the following is used in the calculation of both return on investment and residual income?
a. Total liabilities.
b. Total stockholders' equity.
c. Retained earnings.
d. Invested capital.
e. The cost of capital.
Question text
Which of the following methods ignores the fact that some service departments provide service to other service departments?
a. Step-down method.
b. Dual-cost allocation method.
c. Indirect method.
d. Direct method.
e. Reciprocal method.
Question text
An automotive company has three divisions. One division manufactures new replacements parts for automobiles, another rebuilds engines, and the third does repair and overhaul work on a line of trucks. All three divisions use the services of a central payroll department. The best method of allocating the cost of the payroll department to the various operating divisions is
